Friday, September 14, 2007

This press release makes a whole lot of sense...

Kelty Plans on Immediate Halt to City Spending of TIF FundingUse of TIF Funding by Current Administration Little More than “Slush Fund”

* Press Release * Sep 13, 2007

FORT WAYNE, IN, – Mayoral candidate Matt Kelty announced today his plans for a halt, and then a change in direction, for the City’s use of Tax Increment Financing (“TIF”) districts. Kelty claims the current administration has turned a valuable economic tool into the equivalent of a development “slush fund”, with little oversight or accountability for how TIF funds are spent.
“TIF districts are supposed to be closed out when the development project is done, so that the increased tax revenue from the improved property can be used to fund our schools, fire and police protection, and other essential functions of city and county government,” said Kelty. “That’s one of the core purposes of a TIF district—to grow our tax base so the individual tax burden can be reduced.”

A TIF District is established to re-pay bonds used to support economic development at a specific site and for a specific purpose. After a project is completed and the property is worth more, the property yields additional property tax dollars—but these dollars are captured by the Tax Incremental Finance District and spent only to re-pay the public debt. With TIF districts, public investment in a project is paid for, or repaid by, the additional or “incremental” increase in property taxes generated by the finished project. The entire increase, which can be substantial with a project like Jefferson Pointe, can only be used for the direct benefit of the TIF area until the project is complete. Regardless of how much the property tax revenue increases, city and county budgets, the schools, and other local government operations get no benefit from the increase while the TIF remains in place.

“Jefferson Pointe has generated millions of dollars of ‘extra’ property taxes above what was needed to complete the project and pay off the bonds, and not one penny of it has made its way into the City, County or school corporation budgets,” says Kelty. “Instead, the administration has continually amended and expanded our TIF districts, and broadened the scope of the projects.

By keeping the TIF districts open, and keeping the millions of dollars of taxes they generate segregated, we are able to pretend that we have huge amounts of money available to build baseball stadiums—while we don’t have money to refurbish our schools or take care of our pension debt to our firefighters. If the money is in a “separate pocket,’” its because the Mayor’s office has kept the money out of the pocket that pays for basic services for this City.”
Kelty wants to change that.

“When the TIF project is complete, the TIF needs to be closed, so those revenues are received and accounted for in our city, county and school budgets.”

Until the harm caused by inappropriately extending TIF districts is fully understood, Kelty proposes an immediate, temporary halt to the following:
1. Expansion or amendment of existing TIF districts
2. Commitment of funds to any new projects within existing TIF districts
In addition, Kelty will halt all new purchases of real property by the Redevelopment Commission using TIF funds—unless the property is within an existing TIF district, the purchase is first discussed and approved by the Commission at a public meeting, and the property is first appraised.

As Mayor, Kelty intends to conduct a thorough review of all existing TIF districts and, if necessary, an audit of revenues and expenditures.

“We need to know exactly where we stand with each of these TIF districts—how close we are to concluding the public commitment; what balance remains to be paid; how much the incremental revenue increase is; and how soon we can close the TIF so those funds can be used responsibly as ordinary property tax dollars. The current approach has been the opposite: when the project is nearly complete, we look for a way to keep it going and keep the TIF money separate.”
Kelty states that closing the TIF districts when the initial project is completed will also bring greater transparency and accountability to City operations.

“There is something fundamentally wrong when the City Council, the elected fiscal body, doesn’t know until long after the fact that the Redevelopment Commission has committed millions of TIF dollars to purchase property outside of any existing TIF district or approved Economic Development Area. These were decisions made in executive sessions, with no public record and no recorded votes, which led to the ludicrous situation where we obtained required appraisals after we bought the property, not before.”

Kelty contends that keeping so much revenue in the TIF district and outside the City budget (and City Council’s normal review procedures), encourages government to act in secret and is a clear temptation to favoritism.

“When government is allowed to act in secret, it’s usually for issues of national security, or at least public safety, not to try to get a good price on a piece of land wanted for public entertainment.”

More information concerning Kelty’s planned approach to TIF districts is available in his TIF Policy Statement at his website, www.mattkelty.com.

12 comments:

Phil Marx said...

When city council was selling Harrison Square, they kept making a big deal about the fact that it was not being funded by property tax. They also stressed that they were largely using money (especially TIF)that has already been accumulated through taxes in the past. Basically, they tried to portray that this project really wasn't costing us anything because the money that they wanted to use for it had already been accumulated.

But now, that accumulated money is no longer there, so when we need to use it for other things, they'll have to tax us again to pay for them. I had the opportunity to share this point of view with one member of City Council. His response was something along the lines of "I don't understand why you're upset. It's not like I took cash out of your pocket. I just raided your bank account."

Matt Kelty hit the issue dead-on here. They use these slush funds to try and deflect the true cost to taxpayers of their special projects. As if they just found some money lying around, so they may as well spend it.

Jeff Pruitt said...

"In addition, Kelty will halt all new purchases of real property by the Redevelopment Commission using TIF funds—unless the property is within an existing TIF district, the purchase is first discussed and approved by the Commission at a public meeting, and the property is first appraised."

I don't think the mayor has the authority to do this. The sad part is that what he's describing is already required by state law. So an interesting question, that has still never been answered is - how did the Redevelopment Commission purchase this property without first getting appraisals?

Phil Marx said...

MAGIC...At least that makes as much sense as anything else they've said about H.S.

John B. Kalb said...

Jeff (& Phil) The lack of appraisals is unimportant - what is important is the timing of the purchases relative to other events - please be aware of the following:
IC 36-7-14-16(b) reads in part, " a redevelopment commission may not proceed with the acquisition of a redevelopment project area until the approving order of the plan commission is issued and approved by the municipal legislative body".
In the case of Harrison Square, the approving order of the plan commission was issued on April 23, 2007 and the Fort Wayne City Council approved it on April 25,2007. Both of these dates are well after almost all of the final payments for the properties - that's ALL the properties (the first was already on December 7, 2006) - making them all illegal.
Since, per Greg Leatherman, the initial agreements were made as non-binding with a listed last date of making the them binding as of a day in July, 2007. Why did redevelopment insist on making these payments completing the purchases when they did? Obviously it was to be able to go to our Common Council with completed payments as a way to "seal the deal".
Just great! We shall see what a judge & jury says about this! John B. Kalb

Squarefinger said...

From Sunday's JG, "“A lack of precision in criticism seems to be a trait of candidate Kelty,” Richard said."

I believe the independent audit Kelty has called for is PRECISELY what is needed. I'm sure if the Mayor's position is vindicated, Kelty will be more than happy to recant. Manges is already headed for the door, Richard is on his way out, can Leatherman and Becker be far behind?

I think Kelty said it best in a press release, "I just don’t think it’s fair for the Mayor and some outgoing City Council members to pull the pin on the grenade, then run. Where is accountability for them?” - Apr 23, 2007

Except for the lawyers and contractors, it looks likes others involved are starting to run to get out of the bursting radius of that grenade.

Tick, Tick, Tick

Jeff Pruitt said...

John,

The appraisals, or lack thereof, is important because buying the property w/o them is agianst state law...

Anonymous said...

I wonder how you Kelty supporters feel about Matt SUPPORTING the FWCS $500 million bond issue?

According to Sunday's JG- Kelty felt Graham Richard should have been out front pushing for that to pass.

So much for "Mr. I am going to limit spending" Kelty.

Squarefinger said...

My take is that Kelty identified the void of leadership at the time of the FWCS debate. I didn't get that he was personally attacking the Mayor, just questioning his judgment. If I read correctly, his point was the Mayor was AWOL from the FWCS remonstrance debate at all.

It is certainly not hard to see why, in that it was at the same time as the Mayor & Co. were trying to keep Harrison Square sold. How could he sell both his $160M pet project and ask for another $500M for FWCS.

He paid lip service to the schools and let the thing take its natural course. Although the Mayor has been snake-bit in his own private business endeavors (Micro Standard), he clearly saw the FWCS debate a loser and stayed clear.

He made a political calculation and did not invest any capital in FWCS because he saw it was a loser, and counter to his own objectives, Harrison Square. He did not take a leadership position on the FWCS debate because it was not in his interest. I think this is the only distinction being made.

Nothing personal, just a questionable judgement call that is being called into question.

John B. Kalb said...

Jeff - My point is, with or without an appraisal, it's against Indiana State law!!! John B. Kalb

AllenCountyLpRocksmySocks said...

Is there someone from the ALLEN COUNTY LP running for mayor?

Please tell me YES.

ROACH said...

express you disgust- Write in Roach!
there is no LP for Mayor.

And since when did Allen county; FTW, or anybody else in town worry about pesky State Laws?
they have benn ignoring Gambling laws- sports betting, Nascar betting, cherrymasters, poker "tournaments", and back-alley gambling casinos for years.
So the judges, cops, politicians, lawyers, are all guilty of violating their oaths of office to uphold the constitution, and the laws of the state.
they are either ignorant- not a clue what illegal racketeering is going on here, incompetent- clueless how to investigate, and prosecute political crimes, and racketeering; or crooked- someone is paying them all off to ignore alll the illegal political, and business racketeering- and go after the little fish instead- drunks, potheads, micky mouse misdemeanors- to keep the head count up at the ACJ, the rehab clinics, and line the pockets of local lawyers- as well as paying for the court-cop criminally injustice system.

There is no rule of law in FTW- that cant be bought and paid for if you know the right people- and YOU (and me) are not the right people...
FTW- circling the bowl
flush this Wasted city

Robert Enders said...

There are no Libertarians running for mayor this year. However, the city council controls the budget, and is in a far better position to do something about property taxes and TIFs.

They do not count write-in votes unless they are for a declared write-in candidate. You have to collect a lot of signatures for that.